The Great Recession, Household Income, and Children’s Test Scores

Mark McGovern
Slawa Rokicki, Harvard University

The Great Recession had a major impact on the economic welfare of households worldwide. We examine how income changes during the recession affected children’s educational performance in Ireland, one of the most affected countries. Using longitudinal data on standardised numerical and verbal test scores, collected before and after the recession when cohort members were aged 9 and 13, we compare regression results from random effects and fixed effects models. The latter account for time invariant omitted variables that are potential common causes of both household income and academic performance. We also investigate non-linearities and effect heterogeneity using quantile regression. While permanent income is strongly predictive of test scores, there is little evidence of short-run negative effects of the Great Recession on children’s educational performance. In this paper we estimate the effect of transitory shocks; further data are required to isolate the causal impact of long-run impacts.

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 Presented in Session 105. Short- and Long-Run Effects of Unemployment on Workers and Their Children